Fixing competition policy to drive economic growth and jobs

Joint media release with The Hon. Malcolm Turnbull MP Prime Minister and The Hon. Kelly O’Dwyer MP Minister for Small Business

The Turnbull Government will legislate to fix competition policy in Australia through implementation of the Harper Review’s recommendation to amend Section 46 of the Competition and Consumer Act - the misuse of market power provision.

The Harper Review into competition policy - an election commitment of the Coalition Government - found Australia’s current misuse of market power provision is not reliably enforceable and permits anti-competitive conduct. This slows the entry and expansion of new and innovative firms, delays the entry of new technologies into Australia and impedes economic growth in the long term.

The Harper Review recommended that Section 46 be replaced by a new provision, which is better able to deal with harm to competition in Australian markets.

Following the review, and understanding of the concerns about the operation of the misuse of market power provision as well as the need to ensure the provisions enhance rather than inhibit competition, the Government undertook extensive consultation with stakeholders to soberly work through the issue.

Following this rigorous process the Government has decided to repeal the current Section 46, and adopt the changes recommended by the Harper Review in full. This will result in a new provision that prevents firms with substantial market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition.

The Government is committed to fixing Australia’s competition policy and the amendment of Section 46 to deal with unilateral anti-competitive conduct is an important step to ensure Australia has the best possible competition framework to support innovation and boost economic growth and jobs.

Conscious of the needs of business, the change is deliberately designed to reduce the uncertainty associated with amending a law. It uses existing legal concepts from within the competition law – such as ‘substantially lessening competition’ – and ensures the focus of the provision remains only on those firms that have substantial market power.

This reform represents a commercially and legally robust law, preventing firms with market power engaging in behaviour that harms the competitive process. It places Australia’s competition law on the right footing to encourage economic growth and innovation.

An effective misuse of market power provision is an important and necessary part of competition law, particularly for Australia’s more than two million small businesses which make up more than 97 per cent of all businesses.

The changes the Government has announced will more effectively focus on the long-term interests of both small businesses and consumers, improving the law’s clarity, effectiveness and force.

The change to Section 46 will protect the competitive process and is just one of the many actions the Government is taking to support small businesses, including by extending protections against unfair contract terms to small businesses and introducing Australia’s first Small Business and Family Enterprise Ombudsman.

Today’s announcement adds to the benefits small businesses are receiving from the Government’s response to the Harper Review.

The Government’s response will directly benefit small businesses through:

access to remedies, with the Government supporting the Australian Competition and Consumer Commission to take steps to improve its communications with small business and to more actively connect small businesses to alternative dispute resolution schemes;

improving the collective bargaining regime under the competition law, to provide more flexibility and increased information for small businesses, to help improve their bargaining position;

encouraging state, territory and local governments to review their competitive neutrality guidelines, to ensure that their commercial operation do not negatively affect commercial businesses; and

reviewing the anti-competitive impact of regulations, including standards and licensing, freeing up trading restrictions that apply to many businesses.

Protecting the competitive process is unashamedly pro-competition and allows everyone to have a go.

The Government will consult on Exposure Draft legislation before introducing it to Parliament later in 2016.